Can James Warburton fix Seven?

Seven West Media's newly appointed chief executive James Warburton will have been in the job for less than a week when he fronts investors on Tuesday for the free-to-air network's financial results.

He has one big task immediately in front of him: creating a plan to bring the business back to growth. But the strategic challenges that exist are substantial leaving many to think the new network head – who ex-Seven boss David Leckie once described as "ambitious" – will turn to mergers and acquisitions as a solution.

Seven West Media chief executive James Warburton.Credit:James Alcock

As Mr Warburton said last week, when he took over from former CEO Tim Worner, "nothing is on and nothing is off the table".

Rival media executives firmly believe one of the tasks Mr Warburton will look to tick off his list first is deciding whether to replace some of his senior management team.

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Seven's programming and sales strategies, led by director of network programming Angus Ross and chief revenue officer Kurt Burnette, have been under pressure in a tough period for television businesses.

When asked about any more executive changes last week, however, the new network boss said he was "six hours in" and his first focus would be on the foundations of the business. This includes the core television channels, the West Australian newspapers and Pacific Magazines.

There are many areas of concern. Seven doesn't have a subscription video streaming offering and the television advertising market is going through a dramatic shift as Australians turn towards Netflix and YouTube. A similar shift has already happened for magazines and news, with Seven recently putting up a paywall on The West.

Seven's most recent results – for the first half of 2019 – show profit after tax fell 15 per cent to $120.2 million and underlying group earnings (before interest and tax) declined 8 per cent to $146.8 million.

Pacific magazines' revenue fell 13 per cent to $18.9 million with earnings (before interest and tax) down 35 per cent to $4 million. Total revenue on The West declined 10 per cent with earnings down 17 per cent.

High on Mr Warburton's wishlist is no doubt to grow Seven's undernourished digital presence, particularly in the growing subscription streaming services space, with broadcast video on demand revenue for catch-up app 7plus up 43.6 per cent year-on-year to $61 million.

He has also said he wants the business to be "cross-platform" and remain focused on content. It’s very similar to the reasons given by Nine Entertainment Co chief executive Hugh Marks when taking over Fairfax Media late last year.

It is also why Seven came close to its own merger with Fairfax at the time and why it has since been the subject of speculation about a possible deal between the free-to-air broadcaster and News Corp or its pay-TV arm Foxtel.

However, a bigger clue to what Mr Warburton is planning for the coming months might be in comments he made to The Sydney Morning Herald and The Age in early-August.

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Mr Warburton flagged the most likely companies to be caught up in consolidation as "media orphans".

While he wouldn't detail which specific businesses he considered to be ripe for mergers and takeovers the descriptor easily fits radio network HT&E and Seven's regional affiliate Prime Media Group among others.

But can these businesses deliver Mr Warburton what he needs to turn Seven around, namely a digital strategy and earnings growth? And can they even be done?

Seven's share price is currently at a low 40c compared to $1.06 at the same time last year, which makes a scrip deal difficult. The business is also still carrying total net debt at $589 million, on first half results, albeit down 6.2 per cent.

As one media executive said, on the condition of anonymity: "His issue is the existing debt load. He probably can't borrow but he could do an all or part scrip deal with someone. He needs a business that will add to the top line and EBITDA and have synergies. And he needs it quick."

As that same executive said, it's a "real puzzle" what deals actually fit this description.